Silicon Materials, Inc., processes silicon crystals into purified wafers and chips. Silicon crystals cost

$60,000 per batch. The process involves slicing the crystals, which produces 45,000 wafers with a market value of $20,000 and 15,000 chips with a market value of $140,000. The cost of operating the heat process is $65,600.

Required

a. If the costs of the crystal and the heat process are allocated on the basis of units of output, what cost would be assigned to each product?

b. If the costs of the crystal and the heat process are allocated on the basis of the net realizable value, what cost is assigned to each product?

c. How much profit or loss does the purified wafers product provide using the data in this problem and your analysis in requirement (a)? Is it really possible to determine which product is more profitable?

Explain why or why not.